South Africa’s private sector growth sustained in October as costs fall, PMI shows
2024.11.05 03:52
JOHANNESBURG (Reuters) – South Africa’s private sector maintained its growth trajectory in October, bolstered by a decline in business costs and selling prices, a Purchasing Managers’ Index (PMI) survey showed on Tuesday.
The S&P Global South Africa PMI recorded a reading of 50.6, slightly down from September’s 51.0, but still above the 50.0 mark that indicates growth.
The PMI has now signalled expansion for three consecutive months.
New orders continued to grow, marking the longest period of expansion since mid-2022, although the pace slowed to a marginal rate. The growth was primarily driven by the industry and wholesale & retail sectors, while construction and services lagged.
A notable development was the first drop in input costs in over four years, driven by a strong rand, lower fuel prices and reduced interest rates. This allowed firms to cut selling prices, boosting customer spending.
“October was another strong month for the South African economy,” said David Owen, senior economist at S&P Global Market Intelligence.
“The survey data also provided further evidence that inflationary pressures are falling.”
Despite rising sales, employment decreased for the fifth consecutive month as firms remained cautious about costs. However, input purchases rose for the first time since May, with firms increasing inventories amid improving demand and lower borrowing costs.
Business confidence improved, with 52% of respondents expecting output to rise over the next year, citing political stability and improved power availability as key factors. Nonetheless, challenges remain, with delivery delays persisting due to domestic port congestion.
